That doesn’t mean raising the minimum wage had no negative consequences. Reich and his co-author, Denis Sosinsky, found that the higher minimum wage caused menu prices in California fast-food chains to rise by about 3.7 percent. That number is far lower than the “$20 Big Macs” that critics of the law warned of, but it’s still significant at a time when many consumers are deeply upset over the post-pandemic spike in food prices. Even so, Reich points out that this number pales in comparison with the 18 percent raise that the average fast-food worker received because of the new law. (The authors calculated that about 62 percent of the wage increase was absorbed through higher prices, while the rest was likely absorbed by a mix of reduced turnover and, crucially, lower profits for franchisees—hence the massive industry resistance.)
Yeah, there’s probably some level that’s too high, but $16 to $20 per hour is pretty clearly a long ways from it still.
Even the dishonest scoffing like ‘why not make it $500 per hour?!’ would function. All of the people doing work would be better-off. Whatever inflation is attributable to paying more people more money - it’s the opposite of printing money for the schmucks who already have all of the money. The new money goes to the masses. If that devalues each individual dollar, that’s offset by having more of them.
If you straight-up gave every person one million dollars, it would pull everyone toward a certain economic level. You’re only worse-off if you were above that level. 99% of Americans are not above that level.
That kind of radical change would transfer wealth to people who own real assets, such as land, factories, or corporations. I’m actually a bit dubious about it achieving the kind of outcome you describe.
How.
Basically: it kicks off significant inflation, which makes cash worthless and transfers wealth from lenders to borrowers.
For example, if you bought a house and have a mortgage, you can suddenly pay it off with now-worthless cash, and you still have the house. Corporations are mostly big borrowers, so they’ll end up able to pay off their debt in the same way, so the holders of their common stock end up with sudden huge profits.
As opposed to deflation, where corporate lenders also get more value? I don’t trust a prediction where either direction is bad for the same reason.
The inflation caused by giving most people a shitload of money is never going to cancel out how you’re giving most people a shitload of money. Not when it’s raising minimum wage from far-too-little to barely-enough. Not when you’re deciding everyone gets paid like a lawyer. Not when everyone wins the lottery simultaneously.
Even outright hyperinflation would simply flatten the curve, so long as the firehose of devalued currency is spraying across the whole population.
Sudden very large changes to price levels are really damaging regardless of direction. Modest inflation, say 3% per year, seems to benefit people the most